Sunday, January 06, 2008

Tories and New Labour go after the disabled.

The Tories claim they could get 200,000 people off incapacity benefits by requiring recipients to prove they can't work and reducing entitlements. In light of New Labour's goal of getting a million people off incapacity benefits by 2015, this seems small pickings. No wonder Labour accuses them of stealing their ideas (in reality, Labour has simply taken over old Tory policy nostrums). But, setting aside the rank authoritarianism and vindictiveness of such crackdowns, how achievable are such aims? The November edition of the Cambridge Journal of Economics, which is focused exclusively on New Labour's economic management, deals with this question. Since the claim is that this number of people can be moved into work, the obvious answer would appear to be 'no'. That New Labour has reduced the claimant count is without doubt, and while some of it is due to macroeconomic trends, it seems likely that much of it is due to reduction in access to benefits ('welfare reform') given the massive gap between the official unemployment rate and that registered by the ILO.

Cuts, interrogations, 'support'
In this context, incapacity benefits refers to a wide range of receipts. Incapacity Benefits proper are received by 1.4m people; national insurance credits for incapacity by 1m; and Severe Disablement allowance by 0.3m. There are a further 0.3m on Disability Living Allowance who are not included in the overall count. The IB claimant counts are highest in the older industrialised areas of the north, and two areas in Wales have IB claimant counts higher than their working age population. This is associated historically with mass redundancies in the former mammoth industries of coal and steel. Claimants tend to be older, and male - perhaps in part because women receive pension at 60, while men don't receive it until the age of 65. There has already been a reduction in claimants registered in 2004, for the first time in a generation, and if this were to hold, then the reduction by 2015 would amount to 200,000. On the other hand, population dynamics could see trends in the opposite direction - if IB claimants over fifty increase by the same rate as the over-fifty population, then the overall count will have 115,000 added to it. Overall, regardless of policy, the current flows extrapolated to 2015 would add 67,000 to the count. And, since women will have their pension age revised upward to 65 by 2020, the claimant count would be increased further.

In theory, there are enough 'hidden unemployed' in the IB claimant figures to reduce them by one million. The government's proposed measures for dealing with this include precisely those recommended by the Tories - introduce compulsory work-focused interviews with the intention of sorting out those who can work from those who cannot. The benefit will be phased out for all but the most sick or incapacitated and replaced by Employment and Support Allowance, with a strong element of conditionality - recipients must accept forms of training and education designed to get them into work, for face financial penalties. And until they receive their Personal Capability Assessment, claimants will receive exactly what they would on the Job Seekers Allowance (presently £59.15 per week for a single person over 25), thus removing a financial incentive to claim incapacity benefit (£61.35 for short-term incapacitated; £72.55 from weeks 29 to 52; £81.35 for long-term incapacitated) - actually, as you can see here, the financial incentive is initially tiny. Only those expecting to be on IB for a long time would expect a financial benefit from it. That is why one of the government's other proposed measures is to remove the escalation after six and twelve months. They also intend to 'support' GPs in 'helping' people return to work - I suspect this will amount to target-based pressure to force people into accepting work. The journal's research suggests that even these stern measures will not reach the government's target - at best, they might remove half a million from the count by 2015, which means that they would have to find a way to double the impact of their existing measures. Most of the reduction would have to be in those areas mentioned earlier - old industrialised parts of the north with high unemployment.

Neoliberal justification
The dogma underlying the government's approach, which justifies it in its conviction that it is assisting the poor, is the view that "supply creates its own demand" - an extra labour supply will produce higher employment. The market will, on this view, bring demand and supply into balance through wage adjustments (reductions). For this to work, there needs to be maximum flexibility in the labour market (hence, diminished bargaining power for labour, the curtailment of rules protecting job security and so on). As the authors of the journal article point out, it is just not the case that markets automatically balance supply and demand. The effect of these policies will be to increase the official rate of unemployment - only in regions where there is close to full employment already and labour shortages in specific segments to boot will there be the effect the government imagines. That is, in precisely those areas where the IB claimant count is lowest. Given the emerging economic difficulties, the period of sustained employment growth looks like it is coming to an end, and even after recovery it may be difficult to repeat. Further, while the government claims to target those who are not severely disabled and can theoretically do some forms of work, those with enduring health problems are not well-placed to thrive in even a tight labour market.

The policies proposed by both parties are in effect detrimental not only to those claiming IB benefits, but also to the working population as a whole, who are expected to accept reduced wages and security in the government's model. By no means likely to increase employment and tending to reduce the dignity and conditions of those currently on disability benefits, the government's policies will - if they are permitted to get away with it - be able to reduce the size of the welfare state. And that, of course, is what it is all about. The global roll-back of the rights and protections secured by past generations of working people is not passing without resistance. The government's policies on welfare, including cutbacks of pensions, are deeply unpopular. Privatisation of provision is hated. And the congruent process of effective wage cuts and diminishing conditions and entitlements is producing industrial resistance. The barrier such resistance repeatedly hits, as Mark Serwotka recently pointed out, is the commitment of union leaders to the Labour Party. That loyalty is coextensive with profound resignation in the face of the neoliberal assault, a willingness to negotiate away even the most basic forms of protection, and an unwillingness to risk sustained confrontation with the government. Even if the Tories get in and implement the same policies more aggressively (that may be hard to imagine, but they almost certainly would), the union leaders will say "we can't afford to embarrass our party, we must ensure they get elected next time round". The only way out of this is for union members to: a) build up rank and file organisation to resist union leaders when they call for acquiescence, as in the recent postal strike; and b) make a sharp break with New Labour, forcing through an independent political fund as the basis for political realignment.